Money vanishes

Feds' infighting hurts local housing groups.

Tenants Union director Arlen Olson says the feds pulled the rug out from under his organization.

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First, the group got notice that its federal grant for $150,000, half the organization's annual budget, had come through—but only $50,000 of it would be available because of a mysterious glitch in processing the funds. Then, a few weeks later, $260,000 suddenly appeared in the bank account the tenants' group shares with the federal government—leaving more than two years' worth of grant funding in the account. Thrilled, the Tenants Union (TU), which provides information to tenants and works to promote tenants' rights, set about spending the money, earmarked for tenant outreach programs. But one week later, they got a puzzling letter: It said that because HUD had apparently violated an obscure government law, all of the money had been frozen —including the $50,000 the Tenants Union had received (and spent) back in the spring. "We had been ramping up and all of a sudden we had the rug pulled out from under us—we didn't have time to react or anything," TU director Arlen Olson recalls.

That was back in mid-October. Since then, the union has been forced to eliminate three and a half positions, nearly half the group's shoestring staff. One longtime employee, Siobhan Ring, the only TU member who speaks Spanish, is working for free until the money comes through again-if it ever does. "I've been optimistic because I can't imagine that this problem can't be solved—it just seems so solvable," says Ring. "The layoffs are drastic because we're making up for many months" of spending, Ring adds.

What happened to the federal money? The details are maddeningly complex, but here are the basics: HUD, which gives grants to groups like the Tenants Union to educate government-assisted housing tenants about HUD programs, was authorized to dole out $10 million a year for the grants. The program took a while to get off the ground, and in the first year, only about $1.5 million got spent. HUD got in the practice of rolling over the unspent money to the following year, which meant that some years it handed out more that $10 million. When the Bush administration came in, the new president's housing officials decided that rollovers were illegal, and that any unspent money should just go back into government coffers. That meant that in some years HUD had spent too much—a violation of the Anti-Deficiency Act, which says government agencies can't allocate more money than they have. As a result, HUD froze all the funds, including those—like the Tenants Union's—that had already been spent.

The funding freeze cut off nearly $20 million in assistance to some 40 tenant programs nationwide, including the Washington Low Income Housing Network, which does education and outreach from its three-person Seattle office. There, staff members were notified in late October that they wouldn't be reimbursed for any work done after the end of September, according to housing policy coordinator Jota Borgmann. The loss affects more than the organization's bottom line; it means it won't be able to do crucial outreach programs. The grant money enables the Housing Network to "help tenants understand their rights and help them organize," Borgmann explains.

Fixing the problem isn't as simple as just reallocating the money. At the moment, the congressional committee that could hand out the $20 million needed to cover these programs nationwide is playing hardball, saying it wants to wait until an investigation into HUD practices is complete before it releases the money. Several senators considered the situation serious enough that they began distributing a letter, signed onto by Washington Sen. Patty Murray, imploring their colleagues in charge of the agency's budget to release the money now, rather than wait months for the investigation to grind to a close.

Regardless of the odds, tenant advocates are optimistic that they'll get their money back—eventually. "We're hoping our funding gets restored and we can cover the losses by redirecting other contracts in the meantime," the Housing Network's director, John Ward, says. Having said that, Ward adds, "I'm always too optimistic." Ring, who hopes to come back to a paying job at the Tenants Union in February, worries about the future of the organization. "I'm very scared about what it will be like for us next year," she says. "We spent a lot of time making the Tenants Union a strong organization, and I don't think it can be dismantled by a financial crisis—but it certainly hurts."